Mon | Dec 11, 2017

Editorial | Procurement comedy or sinister farce?

Published:Friday | December 1, 2017 | 12:00 AM

When normally rational people do seemingly blatantly irrational things, it's usually not because they are stupid.

Often, there is a perverse rationality to their actions. Which is what we are yet to fathom in the slow-motion scandal involving the Government's award of a contract, worth J$426.9 million to a company called O'Brien's International Car Sales and Rentals, for the importation of 200 used cars for the police force, over which the national security minister, Robert Montague, and his former opposition shadow, Peter Bunting, have sparred for months.

It further emerged in Parliament this week that O'Brien's has failed to perform in accordance with the terms of the contract, of efforts to bail them out, as well as reasonable questions of whether the procurement process was rigged in favour of O'Brien's. That is why we urge the contractor general, Dirk Harrison, to accelerate any investigation that may be taking place into this deal, or, if one is not ongoing, to start it now!

 

STRETCHING TAXPAYERS' MONEY

 

Mr Bunting, himself a former national security minister, has, from the start, questioned the efficacy of Mr Montague's policy of acquiring pre-owned vehicles for the police. He challenged the economic value of this approach and Mr Montague's assertion that he will get a greater bang for his buck - that he is stretching taxpayers' dollars.

But Peter Bunting also had other concerns about O'Brien's, including whether it had the muscle to execute the contract. There was, too, his disquiet over whether an owner/director of O'Brien's met the fit and proper criteria for doing business with the Government.

Materially more important to the procurement criteria, was O'Brien's offer - and the Government's acceptance - as the security ministry confirmed in May - to deliver Toyota Axio motorcars. The bid document ruled out vehicles with continuously variable transmission (CVT). However, Mr Bunting pointed out that, since 2006, Axios are manufactured with these transmissions. So, on the face of it, the Government breached its tender requirement in awarding the contract to O'Brien's.

O'Brien's was paid half of the contract sum up-front and was to deliver the vehicles within 90 days, or by June 5 this year. At that date, security ministry officials told Parliament's Public Administration and Appropriations Committee (PAAC), that only 30 vehicles were delivered. O'Brien's was given a 90-day extension. Then the company asked the ministry to pay the general consumption and special consumption taxes that would apply to the importation of 76 cars and pick-ups. The company, according to the security ministry, said it couldn't "absorb these costs".

These costs properly belonged to the importer and should have been calculated in the value of its bid. Over the reservations of its officials, the security ministry requested that the Ministry of Finance waive the taxes, which, if it had happened, would have provided O'Brien's with a support mechanism to cushion its own error or deliberate omissions contained in its bid. Rightly, the finance ministry declined the request. So, the security ministry, in order to access the available vehicles, will pay the bill and attempt to recoup their money somehow. The ministry has now given O'Brien's until December 26 to deliver the remaining vehicles.

Significantly, the head of procurement at the security ministry disclosed that even with paying these taxes, O'Brien's bid remained lower than its competitors. That suggests they were either stupid, made a hash of their cost accounting, or had information and or expectations that weren't available to their competitors.

In any event, this seems more a sinister farce than a procurement comedy. Whatever it is, it's no laughing matter. Prime Minister Andrew Holness should want to get to the bottom of it.